Investors using financial advice £40k better off

Financial advice has a big impact regardless of income level, a study from the International Longevity Centre found.

Financial advice has a big impact regardless of income level, a study from the International Longevity Centre found.

Getting financial advice is essential to accumulating more wealth, a data analysis of household and individual surveys in the UK found.

The report, supported by asset manager Royal London, found that those who received financial advice during 2001 to 2007 had more assets and pensions by 2012 to 2014 then those who did not receive any advice.

“Financial advice need not be the preserve of the better off but can make a real difference to the quality of life in retirement of people on lower incomes as well,” said Steve Webb, director of policy at Royal London.

On average those who were just getting by but got financial advice had about 39 per cent more in assets and 21 per cent more in pension wealth than those who didn’t get financial advice.

Those who were affluent and advised also made more than their peers. On average they made about 17 per cent more in assets and 16 per cent more in pension wealth.

Despite the advantage of getting financial advice, nearly 40 per cent of people who took out an investment product didn’t get financial advice, rising to 78 per cent of people who took out a pension.

“Since advice has clear benefits for customers, it is a shame that more people do not use it,” said Ben Franklin, head of the economic aging at the International Longevity Centre. “The clear challenge facing the industry, regulator and government is therefore to get more people through the “front door” in the first place.”

While the study looked at those who received in-person financial advice, robo-advice, or digital wealth technology, could help lower the barriers to getting financial advice, the report stated. The advance of such services could actually even improve the quality of advice and it’s an area that should be explored more, it said.

“Advisers working with robots may well be the future, but only if it adds to, rather than detracts from, the current value of advice,” the report recommended.

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